Imprest Supply Debate

on behalf of the Minister of Finance: I move, That the Appropriation (2013/14 Estimates) Bill be now read a third time and the Imprest Supply (Second for 2013/14) Bill be now read a second time. These bills authorise the appropriations and provide the financial flexibility needed to implement the Government’s Budget and economic strategy for the 2013-14 year.

In considering this Budget it is worth reflecting on the environment in which recent Budgets have been prepared. When the financial crisis started in 2008, it was not appreciated that what was unfolding would become the worst financial crisis since the Great Depression and would impact economies around the world as severely, and for as long, as it actually did. By 2009 it was clear that many countries around the world were in trouble and that the recession New Zealand was already experiencing would likely be serious. Credible forecasters were predicting that unemployment could rise to over 10 percent, and the Crown’s finances had deteriorated alarmingly. The previous Government had increased its spending by 50 percent over the previous 5 years. Much of this new spending was always questionable, even when times were good. In the environment that had developed it was worse than questionable; it was simply unaffordable. Adding to this, we were faced with the Christchurch earthquakes and the enormous costs of responding to these and then rebuilding the city. If no changes were made, Treasury projected perpetual deficits and rising debt.

This was unacceptable. This is not an academic or accounting debate. You do not need an economics textbook to know how that type of scenario ends. All you need to do is turn on the television, or pick up a newspaper and read about events that are still unfolding in Europe, to see the eventual severe economic and social consequences of ongoing deficits and unmanageable debt. Plainly, action had to be taken. This was not a situation that could be solved by wishful thinking, waving a magic wand, or printing money. In the real world there were no simple panacea solutions that could simply and painlessly fix the problem. We faced up to the hard choices and made the decisions that had to be made. This Budget is a continuation of this measured and balanced strategy that we have adopted.

A key issue that we had to address was the outlook for the Crown’s finances. We recognised that we initially needed to accept the large deficit and an increase in debt. This was needed to support living standards and to protect the vulnerable in the face of the global recession, and to rebuild Christchurch after the earthquakes. We also recognised that alongside this we had to take resolute action to put the Crown’s finances on a more sustainable footing and to support the economy returning to economic growth. We did so.

This Budget continues the Government’s economic and fiscal strategy. We have set ourselves a target of returning the Crown to surplus by 2014-15, and of returning net core Crown debt to 20 percent of GDP by 2020. I am pleased to advise the House that with this Budget we remain firmly on track to achieve these targets. Through tight spending discipline and setting key targets for public services, we are returning the Budget to surplus while also improving services and providing new money for key priority areas, such as, health services, early childhood education, tertiary education, and aged care. Through resourcing major initiatives, such as welfare reform, we are helping to assist those who can be reasonably expected to move off the benefit and into work, while also reducing the long-term cost to the Crown.

The other key part of our strategy is to support economic growth. We have made changes to the tax system to lower and more closely align personal and company tax rates, and to shift the tax burden away from work and effort towards consumption. We have invested to support growth. The 2013 Budget continues this by allocating money to measures to support growth and innovation, reducing ACC levies, and improving the provision of new housing. Through the Future Investment Fund the Budget makes significant investments in New Zealand’s key infrastructure. Ten priority targets have been set for the Public Service, where there are opportunities to make a substantial difference. Investment is being carefully targeted to support these. Christchurch remains a key focus. This Budget provides an extra $2.1 billion for the Christchurch rebuild, taking the Crown’s total contribution to $15.2 billion. I am pleased to be able to state that the strategy is working. New Zealand has recorded GDP growth of 2.5 percent for the year to March. There are now 50,000 more jobs than 2 years ago, and the unemployment rate has fallen to a 3-year low of 6.2 percent.

I spoke before about balance. Even though we are on track to achieve that, this Budget is not just about balancing the books. It is balanced in a wider sense, in that it focuses on improved public services, on meeting social needs in areas such as health and education, and on supporting a return to sustained growth. We have set out a clear strategy for New Zealand’s recovery and prosperity. With this Budget we are sticking to it. This is not an unaffordable, reckless-spending Budget, nor is it an austerity Budget. In fact, it provides for $5.1 billion of new operating spending in the current year and over the next 4 years, as well as allocates $1.5 billion of capital investment into hospitals, schools, and priority health investments. This is a balanced and considered approach to achieving long-term growth and prosperity for New Zealand. I commend these bills to the House.

The last speaker, Jonathan Coleman, said that Government expenditure rose alarmingly under Labour. Then he proceeded to abuse statistics, really. He quoted nominal growth figures, not real figures, so he failed to take inflation into account; and he included, under the Labour Government’s increases in spending, the Working for Families tax credits, which we remain proud of, but in the way the National Government reports them they show up as spending rather than tax reductions.

It is notable that that happens differently in other countries, and it is one of the things that needs to be fixed in the way in which New Zealand’s accounts are presented. Indeed, you would think from listening to that speech that the current Government inherited very poor Government books and has had to pursue austerity and cut major programmes to get back to surplus.

💬 Hon David Cunliffe: How many surpluses in a row?

Well, David Cunliffe asks me how many surpluses in a row the prior Labour Government ran. It was nine. It was nine out of nine.

💬 Hon David Cunliffe: How many has National run?

National has run none. The largest of Labour’s surpluses was approximately 6 percent of GDP, and we had a number of them that were very large, all of which were opposed by National. The sum total of those surpluses allowed Labour to reduce Government debt in a time of plenty, and they were good times under Labour. We reduced gross Government debt from 38 percent to 18 percent of GDP and we got net debt down to zero—zero. We got net debt down to zero. Since then this Government has run deficit after deficit after deficit. We agree with the Government that it is important to get back to surplus, because the last Government that ran deficit after deficit after deficit and never got back to surplus and left the country really in the doo-doo was a National Government under Mr Muldoon. In this country we still have that memory and it is fair to say that since then, Governments from both sides of the House, be they National or Labour, have been fiscally responsible. We have not had a fiscally irresponsible Government since Muldoon, and that is why in the Labour Party we actually agree that it is appropriate to get back to surplus next year—and we would have too. So much of that crowing relates to a rewriting of history that does not withstand scrutiny.

Indeed, if you think about it, since this Government came to office it has also had tax cuts—unfairly, in that 40 percent of its income tax cuts went to the top 10 percent. But if it was in such terrible trouble, how come it managed to get back to surplus, having cut taxes as well? The reality is that the accounts it inherited and the economy it inherited from Labour—the accounts certainly—were amongst the strongest in the world. Unemployment was low—it was one of the lowest in the developed world—and this Government inherited the benefit of that.

The problem with this Budget is that it does not work for the everyday New Zealanders who rely upon a Government to set fair settings, which give them opportunities, which give them prosperity, and which push against inequality. This Budget does none of those things. The Minister even had the audacity to say that this Budget set up a future for a decrease in ACC levies. What this Budget and the Government’s Budget for next year do is bank excessive ACC levies, which means that they technically get an operating balance before gains and losses surplus, which includes the benefit of those excessive ACC levies, and then they drop them. The Government could actually drop them this year because it is collecting more than it needs to pay the bills, but as a consequence of its failure to do that for political reasons, New Zealanders pay higher ACC levels, higher petrol prices—

💬 Hon Clayton Cosgrove: Bribe them in election year.

—and it will use them as an election bribe next year.

The Government came to office on the promise that you were going to say goodbye to higher taxes, not your loved ones. Since then more than 200,000 have gone to Australia permanently, lots of people are still leaving permanently for Australia, and 40 percent of them are aged between 18 and 30. Why is that? Why is it that so many young people are leaving? The reality is that too many of our young people end up in low-paid service jobs. All of this work is dignified—every job has dignity—but the reality is that too many of our young people are overqualified and end up pulling coffees and cleaning the elderly, if we are truthful about it.

You know, they are stuck in service jobs because the productivity of our economy is not improving, in large part because this Government refuses to pull the levers that it has available to it to improve the shape of our economy. It continues to undermine wages. Its latest labour reforms are so nonsensical. It says that people lose the right to strike—or lock out in the case of an employer—once there is an irreconcilable breakdown, effectively. So an employer—or a union for that matter, but it will always be the employer—can go to the court and say: “Look, this negotiation’s broken down.”, and from that point forward the right to strike or lock out is lost. What that must necessarily do is that for those who do not want to lose their right to strike, they have got to exercise their right to strike earlier.

So this legislation, which is said to be designed to improve industrial relations, will increase strike action, because it is not about that. It is actually about further driving down wages and working conditions for the everyday New Zealanders, despite the fact that we know that over the last 20 years the share of national income that has gone to wages and salaries, and the share that has gone to profits, has changed, with more going to profits and less going to wages and salaries. Despite that, National wants to make inequality even worse than it already is in New Zealand.

The OECD in its recent report complained to the New Zealand Government that we have got one of the highest rates of increase in income inequality in the OECD. It said that amongst other things we need to fix that by fixing the tax system, which is more beneficial to the wealthy than it is in virtually any other OECD country in respect of a substantial part of income for the wealthy, which is income earned through capital gains. It says that capital income in New Zealand is under-taxed. It is real income. It is real income, except to the extent that it is inflation. Most of it is real income. You have got to be careful you do not tax the inflationary component, but you should be taxing that income because otherwise it is not fair.

The wealthiest people in society pay lower rates of tax, and the gap between rich and poor grows ever higher. Not only would a capital gains tax help fix that, according to the OECD—and the Labour Party agrees—it would improve the economy, because money would be invested in the economy on the basis of profitability of enterprise rather than on the basis of chasing a tax bias. And that tax bias is one of the things that is driving up Auckland house prices for ever higher beyond the reach of first-home purchasers. Homeownership rates in Auckland are under 60 percent for the first time ever. Those homeownership rates are declining because people are competing for the purchase of those houses as rental houses. Some of those people are from overseas; some of them are from New Zealand. Both of them have an advantage in terms of the tax settings, which make that sort of investment tax-preferred, compared with investments in other parts of the economy, like in factories and things that pay real wages.

These are the reasons why we have this two-speed economy in New Zealand, why this Government prefers the interests of a wealthy elite against the interests of everyday New Zealanders, why we have got this rising gap between those who have and those who have not, and why we have got some regions thriving whilst other regions are doing very poorly. It is true that the Christchurch economy is starting to boom on the back of billions of dollars of reinsurance money being re-spent in the rebuild of that economy, and yet we have got other parts of the economy that are fading away. In the next census—

💬 Carol Beaumont: The Government’s done nothing about it.

That is right. The Government does not take an interest and it does nothing about it, and the census results, which are going to come out soon, are going to show how dire that is becoming in some of the provincial parts of New Zealand.

We have got house price inflation in Auckland that is running in double digits, despite the fact that underlying inflation is low. We have got power prices continuing to go up at five times the rate of inflation. We have got profiteering on the back of the public water resource, which is now being privatised through the asset sales programme of the Government, concentrating the value of the profits that are being extracted from the public resource into the pockets of the very small proportion of New Zealanders who own shares in those companies.

This Government came into office pretending it was going to govern for everyone when, in actual fact, we know that those who benefit from it disproportionately—hugely disproportionately—are those who have already got the most. It is not right. We are seeing the same thing in education. We see the Government propping up Wanganui Collegiate School, despite the recommendation of the ministry saying that no additional school was necessary there, at a cost of millions of dollars every year. That is effectively at the cost of poorer children or middle-class children in other schools—

Order!

💬 Hon David Parker: —who are suffering. Have I finished, time-wise?

You have. Your time has concluded, Mr Parker.

Tēnā koe, Mr Deputy Speaker. Thank you very much. I also want to talk about the economy this afternoon. It is the economy that does not get mentioned here—the elephant that tramples around the room. The so-called real world is often referred to, but the economy that is ignored in terms of many of the appropriations, including Vote Energy, is the economy that we all survive on: the water, the climate, the earth, and the soil. Without those things being sustainable, all of the endless rhetoric around balancing books and paying taxes is pretty meaningless.

We see around the world increasing threats to our climate, and yet this country has made no attempt in recent years to do anything about it—nothing. The Arctic is melting and we are down to a large lake that used to be pack ice. It is almost like the naked emperors are running the country, and imagining that if we just talk about fiscal balance and if we just ignore the fact that most of our rivers are polluted, that we have contaminated a large part of the country, and that the only plan is to dig it up and sell it on the commodities market—which is collapsing at the moment for gold and is very shaky for coal—somehow that is going to fix everything. In the end, like anyone else who manages a house, you do it with a budget, and if that budget is not based on the foundations being strong, it does not matter how well you play with the numbers—there is no house.

The tragedy is that the natural world is such an extraordinary, intricate, sophisticated economy, and our relationship is not sophisticated. Our relationship with the economy—and particularly this Government’s and particularly this Budget’s—is a very, very crude relationship. In fact, I do not think the Government mentions the environment at all in the latest Budget. I do not think it got even a one-liner. All it did was cut the Department of Conservation’s spending, and then put $18 million from energy and resources aside for the management of Crown minerals in this country.

It was a really interesting spend, that one. About $4 million was spent on research, so I had a look at what research the Government was doing, because I thought, well, it would be interesting to see, given its track record, what it was researching. I found out that quite a lot of that $4 million is being spent on contracts to do things like identify indicators to permit the discovery of new gold deposits in areas of southern New Zealand. So, in other words, let us help the industry by doing the research and let us find the indicators. Let us do it for the industry—that is our job. The State’s job is to actually find minerals for members of the industry, most of whom will then take the profits offshore. Identify sources of platinum—that was another research project. The Government, in its desperation to attract overseas investment into platinum, is doing its best to find it for investors. It is not actually its job to find all the minerals, but that is what it is going to do.

Another research project in this Vote Energy was to build a framework for utilising mineral resource development. Another one was to enable the management of offshore mining. Well, enabling the management of that is going to be a challenge to anybody, given the global record of the offshore drilling companies and the disasters—Thailand being a case in point. The latest exploration spill in Thailand is an utter disaster. So why this Government would be able to manage that, given that it could not manage a small, coastal disaster, I have no idea. It claims that the project will identify gaps in our understanding of the environmental impact of offshore mineral and hydrocarbon extraction. This, of course, is not unrelated to the bills that were put through to stop protests at sea, and it is not unrelated to the bill that has just been through its second reading in the House around spying on everybody. These are all connected in the great economic plan, and the great economic plan—which is mine it, kill it, drill it—is, unfortunately, out of step with what is going on, if we just raise our heads a little bit and have a look around the world.

Kevin Rudd made an interesting comment recently, when he came back into his role as Prime Minister. He said that he had always been concerned about Australia’s dependency on minerals, and that the truth is in 2013—I am quoting Mr Rudd here—the China resources boom is over, and because the China resources boom is coming off, Australia’s core economic strategy for the future must be one that diversifies the economy. Kevin Rudd is possibly not my soul brother in his views on the mineral industry—I think that is quite possible—but even he can see that there is a need to create more jobs in manufacturing, food production, infrastructure, construction, and the service industries, rather than having the eggs in one basket. In this country we are desperately trying to find the basket and invite other people in to take the eggs out and sell them for their own benefit. That is our strategy, but if you look at what is happening globally, no one else recommends this.

Coal has got very shaky, and we have seen the consequence of that for Solid Energy, and also for the people of the West Coast, who are experiencing a major cycle, and a continuous cycle, which will always happen with the commodities market. It is nothing that is new, and it is nothing that can be relied upon. It is like an addiction, whereby it is almost like we know it is going to fail, we know it is going to hurt, but it is the devil we know. We will do what we have always done and we will get what we have always got, which is a boom and then a bust.

That is what happening not only in coal on the West Coast but also in gold. OceanaGold has just announced that it is going to mothball, and Newmont Mining Corporation, the wonderful multinational in my district, has just announced that it is going to cut a third of its staff worldwide. Why is this happening? This is happening because after the global financial crisis there was a peak in minerals, in particular, and of course as things change and, allegedly, re-stabilise—although I find that ironic, given the runaway mess that the economies of the world are in—people are no longer buying up gold.

It is no longer what it was. Very conservative organisations such as Ernst and Young are saying that there are enormous risks in investing in minerals, so it might be good if the Government actually looked at its own natural allies like Ernst and Young and had a look at what is actually happening before it relies on an entire economic plan based on digging up minerals that are losing their value on a daily basis.

It was interesting that the report that was done by Ernst and Young talked about the top 10 risks over the next 5 years. It studied this from 2008 to 2012, but, looking forward, it says those risks still exist. One of them is resource nationalism. That is, people are not so keen in many parts of the world to hand over their resources. In terms of resource nationalism, people are more keen to get benefit for themselves—funny that—but multinationals are seeing that as a problem. Not, of course, in Aotearoa, where the door is constantly being opened, where the law is constantly being rewritten, where it is: “Welcome, welcome, take, take, take—we love you.” Whether it is Warner Bros or minerals does not really matter. We are almost like an abused child who cannot fight back. We just will say anything, we will offer anything, and we will change any law, so long as someone still appears to love us.

But according to these top 10 risks—there are a number of them, but one of them is that the mining industry is at risk because it is losing the social licence to operate. What that means is that everywhere on the planet there are people—characterised as lunatics, as we often are—who actually think that looking after the environment is fairly fundamental. That is one of the reasons that disinvestment is taking place in the mineral industry. Another one is price and currency volatility. That is manifest right now. You see it with OceanaGold. You see it with Newmont Mining Corporation. They just cannot rely any more on those inflated prices, and they are cutting jobs and they are cutting people’s livelihoods. They are also unable to plan a future that they thought was secure. This is normal for them; they do not really care. It is like: “Well, you know, we got some gold out, we didn’t pay much tax, we didn’t pay many royalties, and now we’re gone—it’s all good.”

But for people in towns like Waihī who are looking at mining underneath their houses, if the price collapses, it may save them. If they are saved, it will be not because of any vision in this Budget or any vision in this Parliament. I have never heard of a country that allows mining directly underneath people’s houses, causing vibration, dust, and shaking and collapsing their property values, and nobody cares what happens to those people. Minister Bridges was recently in Waihī with Scott Simpson, Coromandel MP, and I was told by the locals when I visited them the next day that they were appalled by the lack of concern, the lack of interest, in what is happening to them. They are on their own. Companies are allowed to mine underneath their homes, because the multinationals will do whatever it takes to get the dollar while there is a dollar to be made. As soon as that collapses, they are gone.

So what is going to be the new plan? What are we going to do next? The Green Party has many ideas. There are many positive things we can do to build an economy based on the reality that is called the Earth. We forget that at our peril.

The Government’s Budget this year is accurately described as the boring Budget. No doubt the lolly bag will be opened next year before the next election. This Budget fails to address the major economic and social issues facing New Zealand. It is boring because it achieves very little. What the Budget exposed is that the Government does not actually have a coherent economic policy. There is no economic vision, no economic plan for improving the lives of ordinary Kiwis. Instead, all we get are deals—deals with specific interests or lobby groups: Skycity, Warner Bros, China Southern Airlines, and so on.

For example, it has now been revealed that Treasury warned the Government back in November 2011 that the private benefits to Skycity would exceed the public benefits. But National is blatant in ignoring any advice or any information contrary to its agenda. Then there are the other deals, like selling State assets, so assets go from being public assets to being in the hands of a few. Everything is up for sale: our land and assets, our laws, and even our citizenship. Those deals have one characteristic: they favour the few—the wealthy few—at the expense of the New Zealand public as a whole. In fact, the Skycity deal is likely to be the defining event of John Key’s Government. In all its sleaze, corner cutting, manipulation of process, and trashing of the public interest, it will stand as an ignominious and outrageous legacy of the John Key Government. It really is a shocker. In the Government’s contract with Skycity, it has stitched up subsequent New Zealand Governments for another 27 years. It has also effectively killed the Aotea Centre as a convention centre, at a cost of who knows how many millions to the ratepayers of Auckland. And this is from a Prime Minister who touts his financial savvy and prowess!

Unemployment remains a huge problem for New Zealand. It is no excuse that other countries have worse. The Budget offered little comfort for unemployed people in New Zealand. At the end of March 2013 nearly 150,000 New Zealanders were unemployed. That is an appalling amount of wasted human potential and productivity. With high levels of unemployment, a rational Government would put the brakes on immigration and drastically reduce the number of immigrants. But this Government gave temporary work visas to 140,000 people in the year to mid-2012. That is a staggering number of jobs. In the case of Chinese migrants, parent category migrants outnumbered skilled migrants by a ratio of 2:1. In contrast, New Zealand First’s policy is for a rigorous and strictly applied immigration policy. New Zealand First says immigration policy should be based on New Zealand’s interests, and the main focus should be on meeting critical skills gaps. Unlike this Government, we would put Kiwi workers at the front of the job queue.

Housing is the single biggest problem facing New Zealand today. The Government’s Budget measures on housing policy are actually a mess and fail to deal with the housing crisis, especially in Auckland and Christchurch, where there are severe housing shortages and where first-home buyers especially have no hope of buying a home. In a homeowning democracy, which New Zealand has always been, this is a national disgrace. The Housing Accords and Special Housing Areas Bill would be all right, as far as it goes, with some modifications, in establishing special housing areas, but it does not go far enough. In Auckland, there is a need for at least 12,000 new houses per year, and there is already a housing deficit there of well over 30,000 houses. Under the Government’s plans, there is a probability of no more than 10,000 new houses per year, if that. On that basis, there will never be a catch-up. The worst is that young people seeking a first home will not be assisted by this Government under this Budget to get a home of their own.

To make matters worse, it is highly likely that the Reserve Bank will shortly limit the quantum of high loan-to-value ratio mortgages that the trading banks can make. This is a flawed policy, too—a second-best strategy. Normally, the Reserve Bank would raise interest rates, but that cannot be done without raising an already overvalued New Zealand dollar. If the loan-to-value ratio mortgage limitation does happen, many first-home buyers on low incomes can kiss goodbye homeownership in this country. The Reserve Bank does not care, and this Government does not care either. The policy will do nothing to deter property investors and speculators who have been buying up Auckland property and who also have ample equity already. It does nothing about the migrant flows, which have been concentrated in Auckland. It does nothing to tighten immigration policy in areas such as parental reunion, which have added significantly to housing demand in Auckland. It is not the first-home buyers who have caused the housing bubble, but they will be the sector most heavily penalised by limits on loan-to-value ratio lending. The Government’s policies overall are to blame for this situation. Over the last 4 years the Government has allowed a housing price bubble to emerge through its inept immigration and housing policies.

Only a comprehensive housing strategy, designed to address both demand and supply factors, as advocated by New Zealand First, will make housing affordable for first-home buyers. New Zealand First supports a broad-based housing policy that will make homeownership a reality again, rather than just a dream for ordinary New Zealanders. New Zealand First’s policy to assist first-home seekers is to establish a new State agency to acquire land where demand clearly exceeds supply, and to sell residential sections of modest size on long-term agreements for sale and purchase up to 25 years to first-home seekers, with concessionary 2 percent interest rates for an initial period of 3 years. Purchasers would build their own houses using normal bank financing. The Government’s special housing areas are not enough. New Zealand can do better with New Zealand First’s policy on housing.

Another New Zealand First policy that should be adopted is to put the brakes on foreign speculators pushing up Kiwi house prices. This was recently copied by Labour, I am glad to see. The only difference is that we would not allow exemptions based on nationality. Labour says it will exempt Australians. New Zealand First would apply this policy across the board. There will not be any exemptions based on nationality, race, or any other form of discrimination. We will stop all non-residents from buying both existing houses and sections for houses. The justification is clear. We know that some foreign nationals can get very cheap loans not available to Kiwis, and these people can therefore outbid Kiwis in the house property market, especially in Auckland. To make matters worse, this Government allows parent reunion category immigrants under tier 1 to have fast-track entry into New Zealand if they bring in at least $500,000 with them. So National’s witless immigration policy also makes the Auckland housing problem worse. New Zealand must regulate the foreign ownership of residential property if it is to fully address the Auckland housing market problem.

This year’s Budget was a wasted opportunity. It exposed just how incapable the Government is of getting to grips with the economic challenges facing New Zealand.

It is my pleasure to speak in this debate. It is fair to say that few Budgets in recent times have received such a warm reception as this, the fifth Budget in Bill English’s time as Minister of Finance—a very positive reception. We have had some stories today about business confidence in New Zealand. Business confidence has been strongly rising since the middle of last year, according to the ANZ’s monthly survey. It has hit the highest level since April 1999. Members of the House might wonder what is significant about 1999. It was, actually, in the previous National Government that we saw the same levels of business confidence. A net 53 percent of respondents expect the general business situation to improve over the year ahead, up from 50 percent in June. That is a net 50 percent.

Business assessments of their own outlook remain high. Construction firms are upbeat. Agriculture is still, according to that survey, not the highest, but that survey did not capture Fonterra’s announcement that it has lifted its forecast milk price for the 2013-14 season up to $7.50. The combination of higher prices and increased production can be expected to boost the economy by a further $3 billion. So we have great cause for optimism. The ANZ survey showed profit expectations increased to a 14-year high, driven by the service sector. Investment intentions remain at their second-highest level in 8 years. Employment intentions are very high. The ANZ’s Confidence Composite growth indicator, combined with the Roy Morgan Research survey, is pointing to a potential for 3.9 percent economic growth by the end of the year. These are very positive stories.

Then, if you turn to the country’s business leaders, we saw the overwhelming majority of respondents in the 2013 “Mood of the Boardroom” survey indicating that New Zealand is going forward over the next decade. When rating the prospects for their own businesses and the domestic economy, the majority of business leaders report they are more optimistic than they were a year ago and more confident that over the next 12 months we will see increasing staff, and investment in capital and IT.

I can quote from the Business New Zealand Chief Executive Officer, Phil O’Reilly: “Bill English has really been an exceptional Minister of Finance … He has been sober, boring and sensible but the macro settings have been just right. He deserves more credit for that.” So it has been a very positive reception. I will not mention the polls, because that would be—[Interruption] No, no, that would be gloating. But, generally, we have certainly had a warm reception for this Budget that we are debating in this House today. New Zealanders know. They feel it in their bones. They know that this country’s finances are well managed, and this Budget confirms that New Zealand is on the right track. Growth is amongst the best in the OECD, unemployment is falling, real wages are rising, inflation is subdued, and interest rates are the lowest in decades.

As for the Government books, this time last year, after that Budget, nobody believed that the Government would be back in surplus by 2014: “Oh, no, no, no. They’re not going to make it. There’s no chance of that.” And what do they say today? They know that it will be back in surplus and this country’s books are going to be back to where they should be. This country is confident that the Government knows what it is doing. It is disciplined in its spending. It is extracting better value from its core spending in the Public Service, and it is providing that secure and stable environment in which businesses feel confident to invest, to grow, and to employ. That is what this country needs, and that is what is going to provide the strength behind the incomes and put the food on the table of the New Zealanders who are trying to do their best.

I am not saying that we do not have challenges in this country. Of course we have challenges. There is no need for us to be triumphalist about what is going on here. We are certainly making good progress in improving the welfare system that we have in this country. Paula Bennett deserves a great deal of praise for that, getting some boundaries round a system that has been growing—no questions asked—for decades, and showing that, actually, we believe that everybody can work, should work, and should contribute, and it is actually best for them and their families if they do have that opportunity.

The other area that we hear a lot of concern about, quite rightly, is housing, particularly in Auckland, given the rapid increase in house prices there. On the face of it, that is no bad thing. If you have a house, that is something to be enjoyed. But it is a concern for people wanting to get on the housing ladder, and it is a concern for the potential stability of the New Zealand banking system, where so much money is invested in housing. So, rightly, this Budget was very much focused on addressing Auckland’s affordability issues. We have seen over the last few days all manner of options thrown up as a potential solution. We hear constantly from the Labour Party about how a capital gains tax would somehow miraculously solve this problem, notwithstanding the fact that capital gains taxes on housing in Australia, in the UK, and in the US have done nothing to avoid similar housing bubbles there. More recently we have had suggestions around overseas buyers.

There is no question but that there is an issue with the demand for housing, and we do need to deal with these concerns in a thoughtful and in a considered way, but the other side refuse to hear any talk of an acceptance of the basic need to build more houses as quickly as possible as the best means of getting houses—

💬 Carol Beaumont: That’s not correct—100,000 affordable houses.

Well, yes, it is very easy to talk about waving a wand and the Government somehow, with its great track record on building houses, coming up with 100,000 houses for $300,000, notwithstanding the fact that the price of an average plot of land in Auckland is much more than $300,000. Despite promises that nobody believes have any grounding in reality, when it comes to the crunch of whether you support the efforts that the Hon Dr Nick Smith has made in reaching out to the Auckland Council, reaching out to Len Brown, reaching out to people whom we do not necessarily agree with on all matters, of all shapes and sizes, coming up with these housing programmes and special housing areas, and actually doing something and making a difference, what happens? Do we get the support that we deserve? Do we get the support from Labour? No, we do not. All we get are schemes, dog whistles, and all sorts of focus on the edges and on small elements of the broader issue, and a refusal to accept the need to focus on increasing the supply. That is what this Budget was focused on. I commend the work of Nick Smith and his team for making progress on that.

To get back to the broader issues, let us not forget the four priorities. The essence of the support, I think, and the confidence that we see in the business community, which ultimately leads on to investment, growth, and jobs, is in the predictability and consistency of the Government’s messages over the last 5 years—the predictability about responsibly managing the Government’s books, about building a more competitive and productive economy, about rebuilding Christchurch, and about delivering Better Public Services. For 5 years we have had that consistency from this Government. We have not been lurching to the left and lurching to the right, changing our minds every 5 minutes, and getting in all sorts of tangles. We have been demonstrating consistency over the key issues around the economy.

Although people on the other side can fool themselves into thinking that everybody is concerned about their little side issues and their little politics, when you look down at it, most people are concerned about the strength of the economy and that they have got good money in their pockets and have got prospects of a good job, and that their children have got prospects of getting a good job. That is what this Budget has been delivering. It has been showing that we are back on track for surplus. Looking around at the rest of the world where there is low growth and where Governments are struggling to deal with their debts and are not actually getting on top of the fundamental issues, New Zealand, by contrast, has so much to be pleased about in the progress that we have made over these past 5 years. I just hope that we will be given the opportunity for Bill English—

Order! The member’s speech has concluded, right on the time it is for the House to rise.

Debate interrupted.

The House adjourned at 6 p.m.